The Treasury and SBA have updated the PPP FAQ (see attached). Questions #43 and #45 are especially important and are included in full below. The key takeaway is that the Treasury and SBA have extended the safe harbor repayment date to May 14, 2020 and intend to issue additional guidance on how the need certification will be reviewed prior to the extended May 14, 2020 deadline. Hopefully, this upcoming guidance will provide clarity on which businesses can retain and spend the PPP funds and which businesses should immediately repay the funds and look to alternatives, such as the Employee Retention Credit.
Question #43: FAQ #31 reminded borrowers to carefully review the required certification on the Borrower Application Form that “current economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.” SBA guidance and regulations provide that any borrower who applied for a PPP loan prior to April 24, 2020, and repays the loan in full by May 7, 2020, will be deemed by SBA to have made the required certification in good faith. Is it possible for a borrower to obtain an extension of the May 7, 2020 repayment date?
Answer: SBA is extending the repayment date for this safe harbor to May 14, 2020. Borrowers do not need to apply for this extension. This extension will be promptly implemented through a revision to the SBA’s interim final rule providing the safe harbor. SBA intends to provide additional guidance on how it will review the certification prior to May 14, 2020.
Question #45: Is an employer that repays its PPP loan by the safe harbor deadline (May 14, 2020) eligible for the Employee Retention Credit?
Answer: Yes. An employer that applied for a PPP loan, received payment, and repays the loan by the safe harbor deadline (May 14, 2020) will be treated as though the employer had not received a covered loan under the PPP for purposes of the Employee Retention Credit. Therefore, the employer will be eligible for the credit if the employer is otherwise an eligible employer for purposes of the credit.
The Whitinger team remains available to you throughout this situation. Please do not hesitate to reach out if you have questions or would like to discuss this new guidance.
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